1. Field of Invention
The present invention generally concerns databases and, more particularly, a database structure that identifies the parties that perform roles with respect to financial products.
2. Background of the Invention
An “issuer” is a legal entity (party) that has the power to issue and distribute a financial product, such as an equity security (e.g., common stock) or a debt security (e.g., a bond or note). Issuers can include corporations, municipalities, foreign and domestic governments and their agencies, and investment trusts. Issuers of stock are responsible for reporting on corporate developments to shareholders and paying dividends once declared. Issuers of bonds are committed to make timely payments of interest and principal to bondholders.
A “guarantor” of a security (typically a bond or other type of debt security) is a legal entity that guarantees an obligation of another party. For example, a guarantor may guarantee the interest and/or principal payments on bonds issued by an issuer. If the issuer cannot fulfill its payment obligations, the guarantor is required to fulfill the guaranteed payment obligations.
A “custodian” is a legal entity, such as an agent, bank, trust company, or other organization, that holds and safeguards the assets of another. For example, a mutual fund custodian may hold and safeguard the securities held by a mutual fund.
Some financial institutions, such as investment banks and/or brokerage houses, often endeavor to track the issuers of financial products, particularly the issuers of financial products owned by the firm. Data regarding such products is typically commercially available from product data vendors such as Bloomberg, Thompson and EJV. This data typically includes a numerical identifier for the product (such as the CUSIP ID), a textual description of the product, and the name of the issuer. This data, however, is often unreliable because the product data vendors often have incomplete or inaccurate issuer information, For example, different names may be used to identify a single entity, making it difficult to track all the products for which that entity was the issuer.
To address this deficiency, systems have been developed that assign unique identifiers to the issuing parties in a database of product/issuer data. One such system is known as “Security to Entity CrossWalk,” a joint venture from Standard & Poors, Dun & Bradstreet, and Telekurs Financial. Such systems facilitate tracking of exposure information. However, even with such systems it is difficult for a financial institution to determine its overall credit risk to a particular party. An accurate measure of the overall credit risk to a particular party cannot be measured based on issuer data alone where parties may assumes a variety of risk-exposing roles. Accordingly, there exists a need for a mechanism to track and utilize risk-exposing roles assumed by parties in respect of financial products.